“Do speciality producers really support independent retailers?”
Posted by Paul Hargreaves on
I had to pretend to be a chef for the evening last Friday Night. Last June, rashly I had offered into an Auction of Promises for a fund-raising event for our orphanage in Kenya a “Restaurant Quality Meal for 6 Cooked at your Home”. The bidding had gone up to £150, so the pressure was on to come up with something good, so in an attempt to be hyper-organised I had started preparation on Thursday evening for the event on Friday
To save time I visited a Sainsbury’s supermarket on the way home from work. I shouldn’t have done it! Not because I couldn’t find what I wanted, but because I don’t often visit Sainsbury’s, so when I do I am compelled to start trawling every aisle hunting for products also in our range on the shelves and price-checking for any large differences. If you are the producer of a speciality food brand, I have no issue whatsoever with you selling to supermarkets if that’s what you need to do to make your business viable, but please do not do it at a price that makes independent retailers and their wholesalers look silly. Often, it is the independents that have taken a chance with your brand a while before you present your products to the supermarkets, so do not instantly make them look stupid by having your products on the shelves of Sainsbury’s at a lower price than the independent retailers are buying them for.
Some of our suppliers that have a decent pricing strategy that ensures the retail price in the supermarket is in the same ball park as the independents, but there are also some that have not thought it through properly or are happy to lose their business in independent retailers. There are a few that we will be talking to this week! It is particularly frustrating for us when our sales team have worked really hard for more than a year to sell products to our independent customers but struggle due to price resistance. Then seeing those same products ending up on supermarket shelves at much more respectable retail prices is galling as independent retailers would have had success at those prices.
A couple of years ago, we had these delicious chocolate bars with interesting flavours in our range. For us to make the normal wholesaler’s margin and retailers to make only 35% margin (probably less than Sainsbury’s) the bars were retailing over £4.50. To see them on the shelves in Sainsbury’s last week, two years later with inflation, retailing at £2.50 is a kick in the teeth to both us and the independent retailers who were trying their best to sell the products at an inflated price. Now it could be that the product has been re-formulated or that there have been savings in process, but either way the message going to independents by this and other brands selling at silly prices to supermarkets is the following: “we do not value your trade, and are only really interested in the supermarkets”.
There is no problem with supplying supermarkets as a viable business strategy, but if you want to maintain trade with independents, then please think about a pricing strategy that works for both!